* Low cost: an airline that offers low fares in exchange for eliminating many in-flight services to passengers. * Long haul: more than 6 hours flight in general, but the definition is very elastic. * Target market: leisure, time and price sensitive business travellers

Current issue

* A swiss regional airline Baboo is planning to launch a new long haul, low cost and europen-based airline FlyA in summer 2013, with transatlantic operation to the east coast of the U.S. * A Singapore budget ailrline, Scoot, will begin operations this model in 2012, joining Malaysia's AirAsia X and Australia's Jetstar, a Qantas subsidiary, in flying long-haul in the region. * Transatlantic budget carrier Zoom Airlines ceased all operations because of financial difficulties in 2008. * International Lease Finance Corporation (ILFC) to lease six Airbus A330-300 aircraft to AirAsia X between 2013-2014. AirAsia X CEO aims at being the dominant market leader in the low-cost long-haul segment.

Problem/ challenge

* Fuel is the most expensive part of long-haul costs, and there is less scope of fuel reduction per passenger. Bigger aircrafts need with higher fuel cost to fly and the price of fuel is fluctuant. * Product and service become more complex: scheduling, in-flight entertainment, flight transfers and air cargo. * Taxes are a huge barrier and a threat to low cost long haul airline, because of Air Passenger Duty raised. * Difficult to match the marginal cost of economy class seats in a mixed configuration aircraft of major carriers. * Labour cost is huge because of long haul airline incurs some overseas accommodation cost and allowance. * Regulatory obstacle: Bilateral agreements limit the markets when new entrant TO start this business model.

Strategy of running long haul low cost airline

* Cutting labour cost: Cabin staff should be reduced in number to the safety minimum (1 per 50 passengers)....

YOU MAY ALSO FIND THESE DOCUMENTS HELPFUL

...Transportation Economics, Volume 24, Issue 1,
The Economics of Low Cost Airlines, 2008, Pages 61-67
Can long-haul low-cost airlines be successful?
Dr Peter Morrell
Cranfield University, Beds MK43 0AL, UK
Phone: +44 1234 754242; Fax: +44 1234 752207
p.s.morrell@cranfield.ac.uk
Abstract
A key question is whether the very successful, largely short-haul LCC business
model can work overlong-haul sectors? This paper compares the cost and other
advantages of LCCs and evaluates how far they might be applied to long-haul sectors.
It is estimated that cost advantages might be much lower than the 50-60% on shorthauls. Other factors such as the adoption by network airlines of some LCC features and
their likely competitive response, the limited potential for market stimulation, the need
for dense markets and feed traffic all combine to cast doubt on the widespread
establishment of the business model for long-haul flights.
Keywords: airline operations; long-haul air services; low-cost airline viability
1
1. Introduction
The idea of a low-costlong-haul airline is not new but previous attempts have not
been successful. Since their demise, however, new...

...Transferring the successful business model of
short-haul low-cost airlines to the long-haul
market – why does it not work?
Universidad del Pacifico
Globalization, Multinational Corporations & Foreign Direct Investment
Research Paper
3.12.2012
1
1. Introduction
In terms of financial achievements the airline industry has not performed well over the past
decades. It has even been stated as ‘an example of how not to run business in the 21st Century,
when looking at hard numerical facts’ (Button & Ison , 2008). However, there have been
exceptionally flourishing cases, especially in the low -cost short-haul airline industry. Companies
such as Ryanair in Europe or Southwest Airlines in the USA have gained considerable profits
throughout the past decade. Even during the aftermath of the September 11, 2001, terrorist
attacks, incurring severe losses in the airline industry, they have remained profitable (Button &
Ison, 2008, Flouris & Walker 2005). As opposed to full -service carriers, most low-cost carriers’
(LCC) business models consist of one especially important feature, namely its price. Rigorously
simplifying the consumer product and focusing on the core of air transportation enables LCCs to
charge significantly lower fares and thus to compete with convent ional airlines. Low-cost shorthaul airlines have been...

...Abstract
The author, Myles Horton, does a very well job by giving his readers a vision image of what went on in his life. The author took a lot of short person stories and made them into a very powerful book that opened many people’s eyes. Mr. Horton did not see himself has a leader, he merely saw himself as an educator. He believed all people should understand things for themselves based on their experiences and knowledge. He wanted to show why he Highlander and for who he started it for. The short stories allowed the reader to get inside of Myles Horton’s mind and see what exactly he was thinking. The LongHaul can be described as book used to inspire people who are down and need help getting up to feet.
Short Story
I short I choose was called. It talked about how his grandfather could not read but still could do many things. My grandfather was the way. He could not read, but he was the most sought out person for construction in his time. My grandfather could do many things just like his. This short story really spoke to me because not many people in my family have an education over high school and none have a college degree. My grandfather, just like his, could do many things that other people could not do. I know whenever people wanted a house built they would call my grandfather asking him could he do it. My grandfather also knew a lot about cars. Cars were his passion and if someone need their car fixed or worked on they would call...

...success by integrating the AirAsia X brand. This can be achieved by the “X” representing premium choices on long-haul flights. This will this ease brand confusion by having only one Air Asia brand with extra (X) options, and will present a strong united front.
2) Implement Long-Haul Flights Strategically: AirAsia has the ability to provide long-haul flight at lower costs than other airlines, and therefore Air Asia should expand its long-haul flights. However, they need to expand in this direction very strategically as to not disrupt their low cost strategy. This can be achieved by providing flights to places with similar culture and way of life, and to places of similar geographic conditions.
3) Remain one of the “Cost Leaders”: Because one of Air Asia’s main competitive advantages is being able to provide flights at low costs, there should be a high priority placed on keeping unit costs low while expanding. This can be achieved by maintaining their already existing “cost conscious” policies and decision making.
Conclusion
AirAsia should stick to its vision to run long-hauls because the company has the capacity to offer these flights at lower costs than competitors. An amalgamation of the AirAsia and AirAsia X brands will reduce brand...

...Accounting 205: Cost Accounting and Cost Management, Part I
Long Quiz 1
Purity Company is a newly-established firm whose main line of business is manufacturing dried fish. Its fish serve as its raw materials, while its packaging materials are being considered as indirect materials.
The company has three selling areas: Area A, Area B, and Area C.
The company uses weighted average cost system in costing for its work in process and finished goods inventories.
Provided below are the additional manufacturing and non-manufacturing costs incurred by the company for its second month of operations ended on May 31, 2015:
Inventories
Beginning balance
Ending balance
Raw materials inventory
₱ 126,000
₱ 98,000
Packaging materials inventory
180,000
140,000
Finished goods inventory
450,000
?
Work in process inventory
761,205
?
The beginning balance of finished goods inventory is composed of 15,000 units.
The beginning balance of the work in process inventory is composed of 10,000 units. Its cost is broken down as follows:
Raw materials
₱ 245,550
Direct labor
429,713
Factory overhead
85,943
The number of units started in production during the month of May is 100,000 units. In line with its...

...What is included in the cost basis of a long- lived asset? Explain for a least two types of such assets.
Add the original price of your investment and any transaction costs. For example, if you buy 100 shares of stock at $10 per share and pay a $20 broker’s commission, your purchase expense totals $1,020.
Disregard dividends or other income you receive as cash while you own the investment. Dividends or interest are classified (and taxed) by the Internal Revenue Service as ordinary income and do not increase or decrease your cost basis.
Add any additional money you invest (plus transaction costs) to your original purchase expenditure. Most often, such additional investment is in the form of reinvested dividends. Another example is money you spend for improvements to a real estate investment.
Add the transaction costs you pay when you liquidate the investment. If the original purchase expenditure for 100 shares of stock was $1,020, and you paid $30 in transaction fees to sell the shares, your total investment expenditure comes to $1,050. This is your cost basis.
What sources are reliably used to estimate as asset's useful life?
Depreciation is the process of allocating the cost of long-lived plant assets other than land to expense over the asset's estimated useful life. For financial reporting purposes, companies may choose from...

...Introduction:
‘Effective Long-Term Cost Reduction: a Strategic Perspective’ is a study by Michael D. Shields, and S. Mark Young, that deals with the Cost Reduction Programs that were employed in the late 1970s, and throughout 1980s. The study further sets forth a more viable basis for effective long-term cost reduction. The study concludes with the findings that the long-term controllablecosts are caused by employees, individually and in groupings that matter to the entire organization.
The study suggests that the key to a successful long-term cost reduction is to make cost reduction a part of the organizational culture.
Analysis:
The study firstly deals with the traditional cost reduction programs which primarily suggest that a cost reduction program is a distress tactic study targeted at all employees, which starts with an immediate threat such as poor performance, loss of contracts, or price reductions etc.
There are five historical approaches which deal with different aspects of cost reduction in an organization:
APPROACH STRENGTHS WEAKNESSES
1. Technology Approach:
To replace employees with new technology for increased output. 1. Decrease in the influence of Unions,
2. Instant cost cut. 1. Increase in the requirement of highly skilled labor;
2. Increased...